Teamsters’ Objection to $27 Million Lyft Deal Rejected

SAN FRANCISCO (CN) – A federal judge rejected teamsters’ objections to a proposed $27 million settlement between Lyft and a class of 163,000 California drivers from the bench Thursday, but also delayed finalizing the deal.

The Uber Lyft Teamsters Ride Share Alliance, or ULTRA, filed a lengthy brief opposing the deal in October, claiming it fails to adequately compensate full-time drivers and forces workers to waive their rights to sue Lyft on violations of the Fair Labor Standards Act.

During a final settlement approval hearing Thursday, U.S. District Judge Vince Chhabria appeared to grow increasingly frustrated with an objecting attorney’s inability to offer specifics on why he should reject the deal.

Attorney Robert Bonsall said doubling compensation for those who drove 30 hours or more a week for Lyft is inadequate because it gives part-time drivers a relatively high level of compensation for less work. But Bonsall could not say exactly what the multiplier should be for full-time drivers.

“How can I accept your objection if you can’t tell me what an appropriate allocation should be?” Chhabria asked.

Bonsall replied that he would need more data to arrive at an exact figure, but he couldn’t say precisely what data he needed to calculate the number.

“Have you not thought about this enough?” Chhabria asked.

Turning to a settlement provision that shields Lyft from lawsuits over alleged violations of the Fair Labor Standards Act (FLSA), Bonsall said the federal statute requires workers to affirmatively opt in to waive their rights to sue.

Because claims of FLSA violations were never raised in the Cotter v. Lyft suit, Bonsall argued Lyft could not simply add that condition to the settlement and force California drivers to waive their rights.

“The waiver in this case will implicate the federal rights of individual drivers in a way not consistent with the statute,” Bonsall said. “They will be bound by this without ever opting in.”

But Chhabria said that happens in class action settlements “all the time,” and he sees no reason why FLSA claims should be treated differently than state-law claims also being waived as part of the deal.

The judge seemed more open to arguments that drivers were not sufficiently notified of the settlement terms and their rights to opt out or object to the deal, however.

Objectors complained the actual text of the agreement was not posted online and that class members were not given adequate time to object to the motion for attorneys’ fees, which was filed after the deadline for objections. The attorneys are seeking $3.67 million in fees, or 13.6 percent of the $27 million settlement.

“I will give more thought on whether further notice is needed,” Chhabria said at the end of the hearing.

During the objections phase of the hearing, a deaf Lyft driver named Colin Piotrowski told the judge through an interpreter about the issues he faces as a driver with hearing problems.

Piotrowski said he had trouble getting Lyft to correct the misclassification of his vehicle as a 5-seater rather than a 7-seater, which makes him lose money on rides. He also described problems getting in touch with Lyft to complain about a passenger who hit him in the head, and that he sometimes misses rides because the app uses audible rather than visual cues to alert drivers to ride requests.

The settlement agreement includes no provision to address issues for deaf or hearing-impaired drivers, but it does require Lyft to end its policy of terminating drivers for any reason.

Class attorney Shannon Liss-Riordan told the judge that 84,000 drivers, or 51 percent of the class, had filed claims for reimbursement thus far.

As of mid-November, class attorneys estimated that drivers who drove more than 2,000 hours for Lyft since May 2012 would receive payments of approximately $11,000 to reimburse vehicle expenses and unpaid overtime.

As part of the deal, the drivers agree to waive their claims that Lyft misclassified them as independent contractors and denied them employment benefits.

Liss-Riordan said drivers may continue submitting claims to receive a portion of the settlement fund up until the first distribution is allocated to drivers. That will occur about six months after the judge grants final approval to the settlement, she said.

The class attorney noted that the settlement will not prohibit drivers from challenging Lyft’s arbitration clause, which requires drivers to resolve employment claims through arbitration rather than through the courts. Liss-Riordian said she has an appeal pending in the First Circuit against a ruling upholding Lyft’s arbitration clause in Massachusetts.